On June 13, Ratehub.ca partnered with the DMZ at Ryerson University in Toronto to host a panel discussion on the gains, challenges, and future of financial technology (fintech) and its effect on banking in Canada.
Ratehub.ca CEO and co-founder Alyssa Furtado joined fellow leaders in the fintech and banking spaces to muse on big questions facing the industry: How can Canadian banks and fintech companies work together to build technology, deliver convenience, and build trust? What are the next big ideas shifting the way we interact with money? What’s the future of digital finance? Here are five things we learned from the event:
The world is changing — banking needs to change too
Canada’s big banks bring a lot to the table: Customers, scale, trust, and big assets. The challenge, according to BMO Partners managing director Andre Salvi, is rethinking the way they operate to become more focused on customer experiences, not transactions.
“It’s a great time to be a bank,” he says. “The velocity of new technology has increased significantly. It allows for a lot more context, personalization, precision around pricing. Ultimately, the customers will win.”
While there might be institutional trust, Furtado says people don’t necessarily trust big banks to have the best rates or products anymore. “This is definitely true for the younger generation. They’re starting to ask the questions of being open to more fragmented providers.”
Banks and fintech should work in tandem
“The conversation has changed from fintech disrupting, to fintech working with banks,” says Jamie Alexander, chief technology officer of digital receipt platform Sensibill. “In the beginning, it was like being in front of the firing line.”
Startup life moves fast, and the panelists agree there are several areas where processes could be sped up. From the banks’ perspective, Salvi of BMO says it comes down to identifying potential long-term partners who have a vision, good management practices, and interest in a transparent relationship.
“The more we have a shared vision for what the opportunity could be, it’ll benefit both sides of the equation. It comes down to a willingness to have a relationship and invest.”
Automation is great, but knowledgable human interaction adds a layer of trust. Karney Li, vice-president of engineering at WealthSimple, says one important focus for robo-advisors is proving their worth when the market goes down. Those interactions determine how much customers trust that company going forward.
“We have advisors on staff to give the right advice. We remind people of their long-term view and why they’re investing, not just what the market is doing today,” he says. “It’s up to us to provide advice and remind them, ‘This is your 10-year plan.’ It’s our job to help drown out the noise.”
Data is king, but there needs to be trust
Jordan Wimmer, CEO and co-founder of AI-powered personal savings tool Thrive Savings, says things are shifting from “the internet of things, to the internet of me,” meaning fintechs and banks will know more about you than you know about yourself.
“We don’t look at age, we look at their values, their psychology, and the product has to be oriented around that,” she says.
Wimmer says she’s most excited about open platform banking. “It’s going to be like an iTunes menu for financial services. It’s a distribution means for startups. It will help startups reach distribution, scale, and lower their customer acquisition cost.”
But with several large-scale data breaches at major companies making the news, Alexander of Sensibill says fintech companies must prove that security is paramount. “If there’s a sense people are ethically using our data, customers will be more likely to adopt services.”
Generational wealth is changing
For millennials, hearty pension plans and homeownership at a young age are simply no longer feasible. In that vein, the next generation As Li of WealthSimple puts it, “Disruption comes in the form of putting power into the hands of people.”
As fintech continues to gain credibility and reach more people, Furtado of Ratehub.ca predicts seeing more educated and empowered users — and that’s a good thing.
“Our future looks a lot different from our parents’, and we have to take financial ownership,” she says, pointing to educational tools such as Ratehub.ca’s newly launched RRSP and TFSA education centres. “There’s a huge opportunity for companies to provide information and services for that.”